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Congressional Democrats have been busy drafting new legislation for the $700 billion Wall Street bailout fund—redirecting its bounty to Main Street, not Wall Street—even though President-elect Obama has outlined a sweeping $800 billion stimulus package that covers some of the same needs.

House Financial Services Chairman Barney Frank (D. Mass) Friday outlined his plans for new legislation, making public some of what was contained in a memo to House members earlier this week, a copy of which was obtained by CNBC.com.

Frank made clear Congress's disapproval of Treasury Secretary Henry Paulson's conception and execution of the emergency funding plan, its determined opposition to a new Paulson request for funds and, most importantly, six “new conditions that would govern the spending of the remaining $350 billion and that we bring forward a bill….”

In a news conference, Franken said there was "such unhappiness" over how the original plan was handled but said there was a "need" for a second round. He said legislation would be introduced later today and hoped to get a vote on it next week.

Though it is arguably open to interpretation as to whether the Frank plan is intended to be complimentary and supplemental to the Obama plan or folded into it, it still raises a number of critical questions.

Video: Barney Frank talks to CNBC about the new TARP bill.

Are Democrats over-doing it, in suggesting $1.35 trillion in new funding be thrown at the economy? Should the TARP fund be dropped altogether given the change in economic conditions and its intended focus? And are there significant differences in strategy already emerging between Congress and the president-elect?

What Comes First?

Among the measures in the Frank plan are “substantial efforts to reduce mortgage foreclosures”, funding for “mortgages at low or affordable rates” and assistance to municipalities and other tax-exempt issuers, as well as help for auto dealers, hurt by the credit crunch.

President-elect Obama’s economic plan announced Thursday addresses some of those issues as well as other fiscal stimulus measures and broader economic goals. His economic team is now working on an overhaul of the TARP as well.

“If this is the direction the new Treasury wants to go, then it makes more sense to cancel the remaining $350 billion and have the debate as part of the stimulus bill,” says Robert Glauber, who oversaw the Treasury’s handling of the savings-and-loan crisis for the first Bush administration.

The question is, what comes first?

“Everyone is expecting the money to be spent. They’re certainly going to do it,” says a disapproving Tom Schatz, president of Citizens Against Government Waste. who predicts TARP 2 will become law before the stimulus package, partly because it contains previously approved money for the auto makers. “The question is how they do it? Will they eliminate some duplication? That should have some effect on what should happen in the stimulus.”

Schatz and others may disapprove of the strategy, but they are resigned to its inevitability. Others are not so accepting.

“The TARP was a bad idea and I don’t there’s any reason to expand it or extend it, “ says former FDIC Chairman Bill Isaac, who is among those of strongly disapproved of using the funds for auto aid. “It’s irrelevant going forward. It creates a slush fund. I think that’s really dangerous.”

Some see an emerging battle between Congress and the President-elect, who appear to have very different ideas about what is best for the crisis.

“It is a contest for power between the president and congress, “ says William Niskanen of the Cato Institute, and a former economic advisor for President Reagan. “If there was a choice, I would much prefer what’s happening with TARP. It is much more smaller and direct. Frank’s plan seems to address the basic problem the economy is facing. The Obama plan doesn’t address the housing problem.”

Niskanen notes that while Obama and his rivals were on the campaign trail, other members of Congress were back in Washington, confronting the crisis, including a seemingly do-or-die vote on the original TARP, amid serious voter skepticism.

“I think the congressional leadership believes it has every bit as much power as the president to decide these issues,” says Isaac. “I don’t think is going to be easy sledding.”

That’s apparent in the somewhat mixed reaction to Obama’s ambitious, yet sprawling economic plan, which quickly drew criticism from both Democrats and Republicans alike, on subjects as diverse as tax cuts and job creation. Some analysts say it is much more than a fiscal stimulus plan and will be difficult to pass quickly and in one piece.

Frank’s plan seems to have broad support, including that of House Speaker Nancy Pelosi. Several members of Congress either failed to respond to a request for comment or declined comment on the subjects.

Late in the last Congress, Rep Maxine Waters (D.Calif), for instance, introduced legislation to cover foreclosure prevention, with the intention it would paid for with TARP funding.

Political battles aside, there’s still the matter of money. The federal government has already thrown trillions of dollars at the economy and the credit crunch with limited success.

There’s a growing sense that taxpayers want to see results, knowing that money isn’t free.

“The numbers are so astonishing that it is finally giving everybody pause,” says Schatz.